Untapped work capacity among old persons and their potential contributions to the “silver dividend” in Japan

In contemporary Japan, the utilization of healthy elderly persons in economic production is one of the most urgent policy matters. In this paper, we have measured the untapped work capacity of old persons, using the microdata gathered in the Japanese Study of Aging and Retirement (JSTAR), a longitudinal survey carried out on subjects aged 50–75. Our computed results show that the volume of untapped work capacity of the Japanese elderly aged 60–79 is vast, amounting to more than 11 million workers at present. We have also applied the computed results to the National Transfer Accounts (NTA) framework, and quantified the magnitude of the use of the untapped work capacity upon potential economic growth. The accumulated effect of the economic support ratio upon potential economic growth is substantial in the long term, generating a sizable amount of the so called “silver dividend”. We have also examined the issue of whether or not the use of untapped work capacity provided by old persons could affect the well-being of workers in other age groups. The regression results support the view that the substitutability between the selected age groups of the elderly and the young is negligible, so that the utilization of potential work capacity of elderly persons is unlikely to pose any serious threat to the employment opportunities of their young counterparts in Japan.